Asian Development Bank

ADB searches for private funding to develop Mekong region

June 4, 2003

The private sector needs to contribute up to 90 percent of a 14-billion-dollar program to economically integrate the six nations that share the Mekong River
the Asian Development Bank (ADB) said.

SINGAPORE (AFP) Jun 03, 2003 – However, almost one year into the program that is supposed to be completed by the end of the decade, private industry¬† has committed only 10 percent, the ADB’s Mekong Department director general, Rajat Nag, told AFP here.

“It needs 14 billion dollars for the remainder of this decade,” Nag said.

“Eighty to 90 percent of that really has to come from the private sector. The governments should not be putting up that sort of money on their own account and the multilateral
(lending groups), even if we wanted to, we couldn’t.”

The ADB’s Greater Mekong Subregion development plan involves 11 flagship programs to intergrate the region in areas such as telecommunications, energy, transport, tourism and other forms of infrastructure.

The Mekong River, measuring 4,000 kilometres (2,400 miles) is among the world’s longest and least spoiled rivers, passing through China, Myanmar, Thailand, Laos, Cambodia and
Vietnam.Nag, in Singapore to drum up business with, among others, the American Chamber of Commerce, said finding the money for the projects was the hardest part of the development plan.

“We have done the feasibility studies of many of these projects. We have done the due diligence for many of these projects and in some cases, even the detailed design is
ongoing,” he said.

“(But) the most important challenge we face is actually getting the funding available. So I’m spending a lot of my time actually making sure these projects have the financial resources.”

Nag said he was confident the money would eventually be rounded up.

“It’s a large amount of money but if we spread it over seven years and six countries it’s not that much,” he said.

“But the really important thing is there is a commitment and interest (from the private sector).”

Nag said out of one billion dollars that was supposed to be spent over the next three years, the ADB will provide 200 million to 300 million dollars through loans to the various governments.

“We believe that our putting in money serves two purposes,” he said.

“One is it gets the projects going and secondly it is a demonstration effect, which means we are telling the world we have done the basic feasibility studies, we have done the design and we think it is a good project.”

Some of the projects already underway or planned under the ADB’s strategy include the so-called north-south and east-west corridors that will eventually link by road southern China and Thailand, via Laos, and Myanmar to Vietnam.

However, the ADB’s critics argue that not all the projects will aid the region, with plans to build up to dozens of dams along the Mekong and its tributaries one of the biggest targets of outrage.

Environmentalists and human rights activists point to a long history of dams built for hydro-power causing immense problems for the local environment and the people who live

The forced displacement of people, deforestation, flooding, declining fish stocks and the erosion of river banks that villagers rely on to grow food have been some of the effects.

Nag said the ADB, which has come under fierce criticism for the problems associated with the Theun Hinboun dam in Laos, had learnt from its mistakes.

However, he said some effects, such as the displacement of thousands of people from their homes to make way for dams, were “part of the process of development”.

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